- Last year was a perfect storm for small businesses due to labor shortages and inflation.
- Bakery Butter& has increased the price of its designer cakes as prices for items such as butter and eggs rise.
- Plant shop The Fernsed experienced high turnover during the pandemic.
Bay Area people wanted cake.
Butter&, a cake shop operating in the San Francisco Bay Area, has entered a valuable niche during the pandemic with quarantine cakes for one to two people. When the pandemic began, Butter& called out some of the laid-off and furloughed workers across the restaurant industry to meet the demand they were seeing.
But Butter&’s 2021 adoption wasn’t so easy. Just like many other businesses are competing for workers.
Butter& co-founder and CEO Amanda Nguyen told Insider: “And we compensate very well, and because it takes so long to train someone to be a cake maker, we put someone on our tight-knit team who isn’t as invested in the role as we are. They are very careful about things.”
The Fernsed, a flower and plant store with two locations in Tacoma, Washington, is also facing employment issues. The company says he hired eight people in 2021, but only two of him are still on board.
they are not alone. Hiring challenges and turnover rates continue to be a problem for many small businesses experiencing the continuing impact of mass resignations and high inflation.
Bill Dunkelberg, chief economist at the National Federation of Independent Business (NFIB), said, “Uncertainty in the small business sector continues as owners continue to grapple with historic inflation, labor shortages and supply chain disruptions. “As we enter the second half of 2022, owners will continue to manage their businesses into a highly uncertain future.”
Not all small businesses are finding the talent they need for open positions
In the United States, job openings are still up compared to pre-pandemic levels, but according to the National Federation of Independent Business Jobs Report for July 2022, 49% of owners said they were unable to fill their job openings. ” reports.
Catherine Raz.
Courtesy of Catherine Raz
current period. “
Finding workers was no easy task for Katherine Raz, owner of The Fernseed. Especially given that Flower has a limited talent pool with extensive design experience. But of her seven people she currently has on staff, five of them, excluding her, were hired in her 2022.
“We kind of had a revolving door of employment for about a year,” Raz said.
He said companies rely more on employee referrals and website job forms to find job candidates than on two sites, Indeed and Craigslist.
“I wouldn’t necessarily say there’s a problem finding the right person for the position,” Raz said. “It’s just that we don’t get as many applicants as I’d hoped, with specific backgrounds related to flower design.”
Turnover was a problem for plants and florists. People left for various reasons. In some cases they left for reasons of relocation. Raz said another reason could be that he was “tired of the ambiguity of working during a pandemic.”
Nguyen said one of the reasons Butter& was difficult to hire in 2021 was because “more people were actually making money out of unemployment than in the food industry.”
Butter& couldn’t hire a 2021 baker. So far in 2022 he will start the business with 3 employees and is looking to hire an operations her specialist and her 1 or her 2 production assistants.
The cake business has shown high retention rates, with only one person recently notifying. Told. The company recently raised his salary by 33%.
“What percentage of my earnings I spend on my team is something I am very particular about. It is an area where I want to be as generous as possible because it is very hard to find people,” Nguyen says. .
Inflation has reached a nearly 40-year high, and businesses need to think about rising prices and their impact on workers.
Another problem facing SMEs is high inflation. Raz is one of those business owners who have to choose whether to raise prices.
“We are taking a proactive approach to ensure that, where necessary, we will increase the price of certain products we distribute on our website as the price per flower stalk increases. ‘, said Raz.
“On the positive side of pottery and everything else, shipping costs are going up and material costs are going up. ,” Raz added.
Nguyen and her fiancé Ted Moran are not only co-founders of Butter&, but also co-founders of Pastel, a delivery service that works with other businesses in the area. They found that some of the Pastel companies were forced to raise their prices. With various ingredients getting more expensive, Butter & recently raised the price of his signature designer cake.
Amanda Nguyen and Ted Moran.
Courtesy of Amanda Nguyen
A cost analysis of some of the ingredients used in Butter& and shared with Insider shows that the cost of butter in May 2022 is more than 100% higher than in February 2021. Egg costs also he has increased by more than 80%.
Companies are also thinking about how they can help teams with very high inflation. For Laz, she previously raised the cost of living for all her staff by 5%.
“I thought I could absorb it somehow, but now I look at salary as a retention tool,” says Raz.
Inflation may have eased in July, but businesses are still looking to raise prices to cope with rising costs. From June 31, he said his NFIB survey conducted on July 7 showed that 70% of his small employers plan to raise average sales prices within the next three months. I’m here.